Securities Law & Instruments

Headnote

Section 80(b)(iii) of the Act - issuer of asset-backed securities exempt from therequirement to prepare, file and deliver interim and annual financial statements andannual report (Form 28), subject to conditions, including the requirement to prepare,file and deliver monthly and annual reports regarding performance of pools ofsecuritized assets.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 77, 78, 79, 81(2), 80(b)(iii)

Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s.5

Policies Cited

National Policy Statement No. 41

National Policy Statement No. 44

National Policy Statement No. 47


IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF
MERRILL LYNCH MORTGAGE LOANS INC.

ORDER
(Subclause 80(b)(iii) of the Act)


UPON the application of Merrill Lynch Mortgage Loans Inc. (formerly BULLSOffering Corporation) (the "Issuer") to the Ontario Securities Commission (the"Commission") for an order pursuant to subclause 80(b)(iii) of the Act exempting theIssuer: (a) from the requirements of sections 77, 78 and 79 of the Act and the relatedprovisions of the regulation made thereunder (the "Regulation"), concerning thepreparation, filing and delivery of interim and annual financial statements in connectionwith the offering or proposed offering, as the case may be, of the C-1 Certificates, C-2Certificates, C-3 Certificates and the Tower Certificates (as defined herein); and (b) fromthe requirement of subsection 81(2) of the Act and section 5 of the Regulationconcerning the annual filing of Form 28;

AND UPON considering the application and the recommendation of staff of theCommission;

AND UPON the Issuer having represented as follows:

1. The Issuer was incorporated under the laws of Canada on March 13, 1995 andis a wholly-owned subsidiary of Merrill Lynch & Co., Canada Ltd. ("ML & Co.").

2. The Issuer filed a long form prospectus dated June 14, 1995, and a supplementalprospectus dated June 19, 1995, in connection with an initial public offering of6,000,000 S&P 500 BULLS (the "S&P 500 BULLS") and received receipts forsuch prospectus from each of the Canadian provincial securities regulatoryauthorities.

3. On December 21, 1998, the Issuer offered, by private placement, $182,083,237(initial certificate balance) of pass-through certificates evidencing co-ownershipinterests in a pool of 32 commercial mortgage loans, of which $163,874,000(initial certificate balance) of pass-through certificates were designated asExchangeable Commercial Mortgage Pass-Through Certificates, Series 1998-Canada 1 (the "Offered Certificates") and sold pursuant to a Confidential OfferingMemorandum dated December 16, 1998.

4. The Issuer was issued receipts by each of the Canadian provincial securitiesregulatory authorities for a short form prospectus dated May 31, 1999 for theissuance of $163,874,000 (initial certificate balance) of commercial mortgagepass-through certificates, designated as Commercial Mortgage Pass-ThroughCertificates, Series 1998-Canada 1 (the "C-1 Certificates") in exchange for theOffered Certificates of the same class.

5. The Issuer filed a short form prospectus dated September 16, 1999 with each ofthe Canadian provincial securities regulatory authorities for the issuance of$193,741,000 (initial certificate balance) of commercial mortgage pass-throughcertificates evidencing co-ownership interests in a pool of 43 commercialmortgage loans, designated as Commercial Mortgage Pass-Through Certificates,Series 1999-Canada 2 (the "C-2 Certificates") and received receipts for suchprospectus from each of the Canadian provincial securities regulatory authorities.

6. The Issuer filed a short form prospectus dated October 1, 1999 with each of theCanadian provincial securities regulatory authorities for the issuance of$220,000,000 (initial certificate balance) of pass-through certificates evidencingco-ownership interests in first mortgage bonds held by the Issuer, designated as1st Street Tower Pass-Through Certificates (the "Tower Certificates") and receivedreceipts for such prospectus from each of the Canadian provincial securitiesregulatory authorities.

7. The Issuer intends to file a short form prospectus with each of the Canadianprovincial securities regulatory authorities for the issuance of up to $300,000,000(initial certificate balance) of commercial pass-through certificates evidencing co-ownership interests in a pool of no more than 60 commercial mortgage loans,designated as Commercial Mortgage Pass-Through Certificates, Series 2000 -Canada 3 (the "C-3 Certificates").

8. The Issuer has been a reporting issuer pursuant to the securities legislation incertain of the provinces of Canada for over 12 calendar months, but receivedrelief from the continuous disclosure requirements under applicable securitieslegislation from the securities regulatory authorities in applicable provinces. Therelief was based on the fact that, after the completion of the S&P 500 BULLStransaction, the continued financial performance of the Issuer was not relevant toinvestors because the S&P 500 BULLS do not represent any interest in or claimon any assets of the Issuer and on the basis that certain notices would beprovided to the S&P 500 BULLS investors.

9. The Issuer is a special purpose corporation, the only securityholders of which,excluding ML & Co., which owns all of its issued and outstanding votingsecurities, are and will be the holders of the S&P 500 BULLS, holders of theCertificates (as defined herein) (the "Certificateholders") and the holders of theIssuer's other asset-backed securities issued from time to time.

10. The Issuer currently has and will have no material assets or liabilities other thanits rights and obligations under certain of the material contracts related to the S&P500 BULLS, the C-1 Certificates, the C-2 Certificates, the C-3 Certificates and theTower Certificates transactions, and transactions relating to other asset-backedsecurities issued by the Issuer from time to time. The Issuer does not presentlycarry on any activities except in relation to the S&P 500 BULLS, the C-1Certificates, the C-2 Certificates, the C-3 Certificates and the Tower Certificates.

11. Merrill Lynch Canada Inc. ("ML Canada") administers the ongoing operations andpays the ongoing operating expenses of the Issuer pursuant to an administrationagreement dated June 14, 1995 (the "Administration Agreement"). Noconsideration is payable by the Issuer in connection with ML Canada's servicesunder the Administration Agreement. The Issuer is not required to compensateML Canada for the fees and expenses paid on the Issuer's behalf thereunder.

12. The Issuer has no material assets and will not carry on any activities other thanthe issuance of asset-backed securities and will have no continuing involvementin the administration of the Securitized Assets.

13. The directors and officers of the Issuer are directors and/or officers of ML & Co.The directors and officers of the Issuer from time to time have not been and willnot be compensated by the Issuer for serving in such positions with the Issuer.

14. No director or officer of the Issuer or any associate thereof is indebted to theIssuer, nor has any such director, officer, or any other insider, or any associateor affiliate thereof, entered into any material contract with the Issuer, other thanas previously disclosed in documents filed with the Commission.

15. No insider of the Issuer, or associate or affiliate of such insider, has a direct orindirect interest in any transaction which has materially affected or wouldmaterially affect the Issuer.

16. The auditors of the Issuer are Deloitte & Touche, LLP.

17. The Issuer proposes to offer from time to time to the public securities similar tothe C-1 Certificates, the C-2 Certificates, the Tower Certificates and the proposedC-3 Certificates (collectively, the "Certificates"), that are primarily serviced by thecash flows of discrete pools of mortgage loans, individual mortgage loans orcertain other financial assets (the "Securitized Assets") that by their terms convertinto cash within a finite time period, with an Approved Rating by an ApprovedRating Organization, as those terms are defined in the Rules entitled In the Matterof the Prompt Offering Qualification System [including National Policy StatementNo. 47] (1998) 21 OSCB 6435 (the "POP System") and In the Matter of Rules forShelf Prospectus Offerings and for Pricing Offerings After the Prospectus isReceipted [National Policy Statement No. 44] (the "Shelf System") or in anysuccessor instruments thereto. The Issuer proposes to make such offeringspursuant to the POP and Shelf Systems, with the proceeds of such offerings tobe used to finance the purchase of mortgage loans and certain other financialassets from originators of mortgage loans and other financial assets.

18. The information contained in the interim and annual financial statements of theIssuer is not and will not be relevant to Certificateholders since suchCertificateholders only have an interest in the related Securitized Assets and donot have any interest in or any claim on the assets of the Issuer.

19. Each pooling and servicing agreement or similar agreement (each, a"Securitization Agreement") which governs or will govern, as the case may be, therights of the Certificateholders and their entitlement to the Securitized Assetsprovides for or will provide for, as the case may be, the fulfilment of certainadministrative functions relating to the asset-backed securities, such asmaintaining a register of holders of asset-backed securities and the making ofperiodic reports to Certificateholders by a custodian and one or more servicersor other agents appointed pursuant to such Securitization Agreement. The namesof each such servicer and agent are or will be disclosed in the applicableprospectus.

20. The Issuer or its duly appointed representative or agent will provide, on a websiteidentified or to be identified in the relevant prospectus for the Certificates or incorrespondence sent to Certificateholders, or otherwise as provided for in therelevant prospectus, no later than the twentieth day of each month (or suchsubsequent business day as is provided in the Securitization Agreement if thetwentieth day of the month is not a business day) the financial and otherinformation prescribed therein to be delivered or made available toCertificateholders on a monthly basis, together with such additional informationas may be prescribed by the Director (as defined in the Act), signed by the Issueror on its behalf by its duly appointed representative, and will contemporaneouslyfile such information on the System for Electronic Document Analysis andRetrieval ("SEDAR").

21. Notwithstanding paragraph 20, the Issuer may amend the contents of the financialand other information filed on SEDAR in order to not disclose the names ofindividual obligors of Securitized Assets as may be required by confidentialityagreements binding the Issuer.

22. There will be no annual meetings of Certificateholders. Each SecuritizationAgreement provides or will provide that the holders of a certain percentage of theapplicable asset-backed securities will have the right to direct the custodian of therelevant Securitized Assets to take certain actions under such SecuritizationAgreement.

23. On not less than an annual basis, the Issuer will request intermediaries to delivera notice to Certificateholders pursuant to the procedures stipulated by the Ruleentitled In the Matter of Certain Reporting Issuers [including National PolicyStatement No. 41] (1998) 21 OSCB 6437, or any successor instrument thereto,advising Certificateholders that the monthly information prescribed in paragraph20 and the annual information prescribed in paragraph 25 is available on awebsite, the website address, and that Certificateholders may request papercopies of such reports be provided to them by ordinary mail.

24. On a quarterly basis, the Issuer will publish in a national business newspaper incirculation throughout Canada a notice to Certificateholders advisingCertificateholders that the monthly information prescribed in paragraph 20 and theannual information prescribed in paragraph 25 is available on a website, thewebsite address, and that Certificateholders may request paper copies of suchreports be provided to them by ordinary mail.

25. Within 140 days of the end of the fiscal year of each pool of Securitized Assets,the Issuer or its duly appointed representative or agent will post on the applicablewebsite or mail to Certificateholders who so request in accordance with theprocedures set forth above and will contemporaneously file on SEDAR:

a) cumulative financial and other information as prescribed by the Director forthe last completed fiscal year with respect to the applicable pool ofSecuritized Assets;

b) management, discussion and analysis with respect to the applicable poolof Securitized Assets included in the Issuer's Annual Information Form filedwith the Commission;

c) with respect to the C-1 Certificates, C-2 Certificates and C-3 Certificates,an annual statement of compliance signed by a senior officer of eachapplicable servicer or other party acting in a similar capacity on behalf ofthe Issuer for the applicable pool of Securitized Assets, certifying that theservicer or such other party acting in a similar capacity has fulfilled all ofits obligations under the related Securitization Agreement during the yearor, if there has been a default in the fulfilment of any such obligation,specifying each such default and the status thereof;

d) with respect to the Tower Certificates, an assertion by each applicableservicer or other party acting in a similar capacity on behalf of the Issuer,in the form prescribed by the Uniform Single Attestation Program (USAP)for Mortgage Bankers, that it has complied with the minimum servicingstandards set forth in USAP, or another assertion, certificate or statementacceptable to the Director; and

e) an annual accountant's report in form and content acceptable to theDirector prepared by a firm of independent public or chartered accountantsacceptable to the Director respecting compliance by each applicableservicer or other party acting in a similar capacity on behalf of the Issuerwith USAP or such other servicing standard acceptable to the Director.

26. The Issuer will issue press releases and file material change reports inaccordance with the requirements of the Act in respect of material changes in itsaffairs and in respect of changes in the status (including defaults in payments dueto Certificateholders), operation or affairs of the Securitized Assets underlying theCertificates which may reasonably be considered to be material toCertificateholders.

27. Compliance with the continuous disclosure obligations set forth in sections 77, 78,79 and 81(2) of the Act and the related provisions of the Regulation by the Issuerwill not, by virtue of the Issuer's restricted business and the nature of theCertificates, provide meaningful information for the Certificateholders. Theprovision of information to Certificateholders on a monthly and annual basis asdescribed in paragraphs 20 and 25 above, as well as the quarterly and annualnotices to be given by the Issuer as to the availability of such information givenpursuant to terms of paragraphs 23 and 24 hereof will meet the objectives ofallowing the Certificateholders to monitor and make informed decisions abouttheir investment.

AND UPON the Commission being of the opinion that to do so would not beprejudicial to the public interest and that in the circumstances of this case there isadequate justification for so doing;

IT IS ORDERED pursuant to subclause 80(b)(iii) of the Act that:

(a) the Issuer is exempted from the requirements of sections 77, 78 and 79of the Act and the related provisions of the Regulation with respect to theofferings of the Certificates with effect from the date of the Issuer'sapplication for the relief hereby granted, provided that the Issuer complieswith paragraphs 20, 23, 24, 25 and 26 hereof; and

(b) the Issuer is exempted from the requirements of section 81(2) of the Actand section 5 of the Regulation, provided that the exemption shallterminate sixty days after the occurrence of a significant change in any ofthe representations of the Issuer contained in paragraphs 9 through 16inclusive, unless the Issuer satisfies the Director that the exemption shouldcontinue.

April 18th, 2000.

"J. A. Geller"     "Howard I. Wetston"